þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 31-1455414 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ |
2
Item 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(Unaudited) | (Audited) | |||||||
July 31, 2011 | January 31, 2011 | |||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 577,885 | $ | 1,403,949 | ||||
Accounts receivable, net of allowance for doubtful
accounts of $140,000 and $100,000, respectively |
2,151,458 | 2,620,756 | ||||||
Contract receivables |
535,941 | 680,096 | ||||||
Prepaid hardware and third party software for future delivery |
40,963 | 72,259 | ||||||
Prepaid customer maintenance contracts |
925,667 | 794,299 | ||||||
Other prepaid assets |
217,187 | 200,056 | ||||||
Deferred income taxes |
167,000 | 167,000 | ||||||
Total current assets |
4,616,101 | 5,938,415 | ||||||
Property and equipment: |
||||||||
Computer equipment |
2,815,087 | 2,708,819 | ||||||
Computer software |
2,037,063 | 1,947,135 | ||||||
Office furniture, fixtures and equipment |
747,867 | 747,867 | ||||||
Leasehold improvements |
639,864 | 639,864 | ||||||
6,239,881 | 6,043,685 | |||||||
Accumulated depreciation and amortization |
(4,895,412 | ) | (4,517,860 | ) | ||||
1,344,469 | 1,525,825 | |||||||
Other assets: |
||||||||
Contract receivables, less current portion |
274,647 | 241,742 | ||||||
Capitalized software development costs, net of accumulated
amortization of $13,833,284 and $12,832,347, respectively |
7,965,127 | 7,575,064 | ||||||
Other, including deferred income taxes of $711,000,
respectively |
738,475 | 734,376 | ||||||
Total other assets |
8,978,249 | 8,551,182 | ||||||
$ | 14,938,819 | $ | 16,015,422 | |||||
3
(Unaudited) | (Audited) | |||||||
July 31, 2011 | January 31, 2011 | |||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 752,454 | $ | 565,252 | ||||
Accrued compensation |
575,603 | 1,163,843 | ||||||
Accrued other expenses |
285,215 | 480,422 | ||||||
Capital lease obligation |
132,299 | 183,637 | ||||||
Deferred revenues |
5,093,616 | 5,766,795 | ||||||
Total current liabilities |
6,839,187 | 8,159,949 | ||||||
Long-term liabilities: |
||||||||
Line of credit |
1,250,000 | 1,200,000 | ||||||
Lease incentive liability, less current portion |
54,464 | 61,034 | ||||||
Total liabilities |
8,143,651 | 9,420,983 | ||||||
Stockholders equity: |
||||||||
Convertible redeemable preferred stock, $.01 par value per share,
5,000,000 shares authorized, no shares issued |
| | ||||||
Common stock, $.01 par value per share, 25,000,000 shares
authorized, 10,053,979 and 9,856,517 shares issued and
outstanding,
respectively |
100,539 | 98,565 | ||||||
Additional paid in capital |
37,461,711 | 36,975,242 | ||||||
Accumulated deficit |
(30,767,082 | ) | (30,479,368 | ) | ||||
Total stockholders equity |
6,795,168 | 6,594,439 | ||||||
$ | 14,938,819 | $ | 16,015,422 | |||||
4
Three Months | Six Months | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Systems sales |
$ | 163,200 | $ | 960,880 | $ | 294,202 | $ | 1,111,318 | ||||||||
Services, maintenance and support |
3,069,869 | 2,830,935 | 6,153,830 | 5,374,510 | ||||||||||||
Software as a service |
912,864 | 884,662 | 1,837,923 | 1,734,665 | ||||||||||||
Total revenues |
4,145,933 | 4,676,477 | 8,285,955 | 8,220,493 | ||||||||||||
Operating expenses: |
||||||||||||||||
Cost of systems sales |
627,550 | 780,506 | 1,168,502 | 1,518,395 | ||||||||||||
Cost of services, maintenance and support |
1,155,667 | 1,378,778 | 2,489,538 | 2,760,988 | ||||||||||||
Cost of software as a service |
417,868 | 472,098 | 854,291 | 929,126 | ||||||||||||
Selling, general and administrative |
1,582,532 | 1,505,863 | 3,247,193 | 3,203,440 | ||||||||||||
Product research and development |
342,157 | 567,147 | 759,931 | 1,037,318 | ||||||||||||
Total operating expenses |
4,125,774 | 4,704,392 | 8,519,455 | 9,449,267 | ||||||||||||
Operating income (loss) |
20,159 | (27,915 | ) | (233,500 | ) | (1,228,774 | ) | |||||||||
Other income (expense): |
||||||||||||||||
Interest expense |
(21,791 | ) | (34,001 | ) | (41,633 | ) | (56,336 | ) | ||||||||
Miscellaneous income (expenses) |
(311 | ) | (9,023 | ) | (5,266 | ) | 42,786 | |||||||||
Loss before income taxes |
(1,943 | ) | (70,939 | ) | (280,399 | ) | (1,242,324 | ) | ||||||||
Income tax (expense) |
(5,000 | ) | (5,000 | ) | (7,315 | ) | (10,000 | ) | ||||||||
Net loss |
$ | (6,943 | ) | $ | (75,939 | ) | $ | (287,714 | ) | $ | (1,252,324 | ) | ||||
Basic and diluted net earnings (loss) per
common share |
$ | (0.00 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.13 | ) | ||||
Number of shares used in basic and
diluted per common share computation |
9,817,370 | 9,506,904 | 9,847,348 | 9,460,911 | ||||||||||||
5
2011 | 2010 | |||||||
Operating activities: |
||||||||
Net loss |
$ | (287,714 | ) | $ | (1,252,324 | ) | ||
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities: |
||||||||
Depreciation and amortization |
1,391,822 | 1,708,706 | ||||||
Loss on disposal of fixed asset |
26,667 | | ||||||
Stock-based compensation expense |
395,732 | 243,104 | ||||||
Provision for accounts receivable |
40,000 | 50,000 | ||||||
Change in assets and liabilities: |
||||||||
Accounts, contract and installment receivables |
540,548 | (133,787 | ) | |||||
Other assets |
(121,302 | ) | (114,459 | ) | ||||
Accounts payable |
187,202 | 200,007 | ||||||
Accrued expenses |
(790,017 | ) | (388,100 | ) | ||||
Deferred revenues |
(673,179 | ) | (328,530 | ) | ||||
Net cash provided by (used in) operating activities |
709,759 | (15,383 | ) | |||||
Investing activities: |
||||||||
Purchases of property and equipment |
(236,196 | ) | (302,292 | ) | ||||
Capitalization of software development costs |
(1,391,000 | ) | (1,274,000 | ) | ||||
Other |
| 2,974 | ||||||
Net cash used in investing activities |
(1,627,196 | ) | (1,573,318 | ) | ||||
Financing activities: |
||||||||
Net change under revolving credit facility |
50,000 | 1,100,000 | ||||||
Proceeds from exercise of stock options and stock
purchase plan |
92,711 | 127,391 | ||||||
Payments on capital lease obligation |
(51,338 | ) | (83,289 | ) | ||||
Net cash provided by financing activities |
91,373 | 1,144,102 | ||||||
Decrease in cash and cash equivalents |
(826,064 | ) | (444,599 | ) | ||||
Cash and cash equivalents at beginning of period |
1,403,949 | 1,025,173 | ||||||
Cash and cash equivalents at end of period |
$ | 577,885 | $ | 580,574 | ||||
Supplemental cash flow disclosures: |
||||||||
Interest paid |
$ | 29,621 | $ | 30,664 | ||||
Income taxes paid |
$ | 16,957 | $ | 16,534 | ||||
6
7
For the three | For the six | |||||||
months ended, | months ended, | |||||||
April 30, 2011 | July 31, 2011 | |||||||
Risk-free interest rate |
2.50 | % | 2.17 | % | ||||
Dividend yield |
| | ||||||
Current weighted-average volatility factor of
the expected market price of Common Stock |
0.53 | 0.65 | ||||||
Weighted-average expected life of stock options |
5 years | 5 years | ||||||
Forfeiture rate |
0 | % | 0 | % |
8
Three Months Ended, | ||||||||
July 31, 2011 | July 31, 2010 | |||||||
Numerator for Basic and Diluted Loss per Share: |
||||||||
Net loss |
(6,943 | ) | (75,939 | ) | ||||
Denominator for basic loss per share weighted
average shares |
9,817,370 | 9,506,904 | ||||||
Effect of dilutive securities (1) |
||||||||
Stock options |
| | ||||||
Restricted stock |
| | ||||||
Denominator for basic loss per share, with
assumed conversions |
9,817,370 | 9,506,904 | ||||||
Basic net loss per common share |
(0.00 | ) | (0.01 | ) | ||||
Diluted net loss per common share |
(0.00 | ) | (0.01 | ) | ||||
Anti-dilutive securities: |
||||||||
Stock options, out-of-the-money |
1,272,467 | 847,000 | ||||||
9
Six Months Ended, | ||||||||
July 31, 2011 | July 31, 2010 | |||||||
Numerator for Basic and Diluted Loss per Share: |
||||||||
Net loss |
(287,714 | ) | (1,252,324 | ) | ||||
Denominator for basic loss per share weighted
average shares |
9,847,348 | 9,460,911 | ||||||
Effect of dilutive securities (1) |
||||||||
Stock options |
| | ||||||
Restricted stock |
| | ||||||
Denominator for basic loss per share, with
assumed conversions |
9,847,348 | 9,460,911 | ||||||
Basic net loss per common share |
(0.03 | ) | (0.13 | ) | ||||
Diluted net loss per common share |
(0.03 | ) | (0.13 | ) | ||||
Anti-dilutive securities: |
||||||||
Stock options, out-of-the-money |
1,282,467 | 847,000 | ||||||
(1) | Excluded common stock equivalents (stock options and restricted stock), as the
inclusion thereof would be antidilutive. |
Line of Credit | Operating Leases | Capital Lease | Fiscal Year Totals | |||||||||||||
2011 |
$ | 1,256,000 | $ | 224,000 | $ | 137,000 | $ | 1,617,000 | ||||||||
2012 |
| 389,000 | | 389,000 | ||||||||||||
2013 |
| 329,000 | | 329,000 | ||||||||||||
2014 |
| 335,000 | | 335,000 | ||||||||||||
2015 |
| 164,000 | | 164,000 | ||||||||||||
Thereafter |
| | | | ||||||||||||
Total |
$ | 1,256,000 | $ | 1,441,000 | $ | 137,000 | $ | 2,834,000 | ||||||||
10
11
Item 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS |
12
13
July 31, 2011 | January 31, 2011 | July 31, 2010 | ||||||||||
Streamline Health Software Licenses |
$ | 51,000 | $ | 121,000 | $ | 174,000 | ||||||
Custom Software |
29,000 | 42,000 | 62,000 | |||||||||
Hardware and Third Party Software |
152,000 | 66,000 | 95,000 | |||||||||
Professional Services |
4,573,000 | 4,629,000 | 3,981,000 | |||||||||
Software as a service |
7,275,000 | 7,362,000 | 8,818,000 | |||||||||
Recurring Maintenance |
6,009,000 | 5,384,000 | 5,788,000 | |||||||||
Total |
$ | 18,089,000 | $ | 17,604,000 | $ | 18,918,000 | ||||||
14
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Systems sales |
4 | % | 20 | % | 4 | % | 14 | % | ||||||||
Services, maintenance and support |
74 | 61 | 74 | 65 | ||||||||||||
Application-hosting services |
22 | 19 | 22 | 21 | ||||||||||||
Total revenues |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Cost of sales |
53 | % | 56 | % | 55 | % | 63 | % | ||||||||
Selling, general and administrative |
38 | 32 | 39 | 39 | ||||||||||||
Product research and development |
8 | 12 | 9 | 13 | ||||||||||||
Total operating expenses |
99 | % | 100 | % | 103 | % | 115 | % | ||||||||
Operating profit (loss) |
1 | % | (1 | )% | (3 | )% | (15 | )% | ||||||||
Other income (expense), net |
(1 | )% | (1 | )% | (1 | )% | | |||||||||
Income tax net benefit |
| | | | ||||||||||||
Net earnings(loss) |
| (2 | )% | (4 | )% | (15 | )% | |||||||||
Cost of systems sales |
385 | % | 81 | % | 397 | % | 137 | % | ||||||||
Cost of services, maintenance and support |
38 | % | 49 | % | 41 | % | 51 | % | ||||||||
Cost of application-hosting services |
46 | % | 53 | % | 47 | % | 54 | % | ||||||||
(1) | Because a significant percentage of the operating costs are incurred at levels that are
not necessarily correlated with revenue levels, a variation in the timing of systems sales
and installations and the resulting revenue recognition can cause significant variations in
operating results. As a result, period-to-period comparisons may not be meaningful with
respect to the past operations nor are they necessarily indicative of the future operations
of Streamline Health in the near or long-term. The data in the table is presented solely
for the purpose of reflecting the relationship of various operating elements to revenues
for the periods indicated. |
15
Three Months Ended, | ||||||||||||||||
July 31, 2011 | July 31, 2010 | Change | % Change | |||||||||||||
Proprietary software (1) |
$ | 14 | $ | 674 | $ | (660 | ) | (98 | %) | |||||||
Hardware & third party software (1) |
149 | 287 | (138 | ) | (48 | %) | ||||||||||
Professional services (2) |
868 | 929 | (61 | ) | (7 | %) | ||||||||||
Maintenance & support (2) |
2,202 | 1,902 | 300 | 16 | % | |||||||||||
Software as a service |
913 | 884 | 29 | 3 | % | |||||||||||
Total Revenues |
$ | 4,146 | $ | 4,676 | $ | (530 | ) | (11 | %) | |||||||
Six Months Ended, | ||||||||||||||||
July 31, 2011 | July 31, 2010 | Change | % Change | |||||||||||||
Proprietary software (1) |
$ | 51 | $ | 702 | $ | (651 | ) | (93 | %) | |||||||
Hardware & third party software (1) |
242 | 409 | (167 | ) | (41 | %) | ||||||||||
Professional services (2) |
1,875 | 1,587 | 288 | 18 | % | |||||||||||
Maintenance & support (2) |
4,279 | 3,787 | 492 | 13 | % | |||||||||||
Software as a service |
1,839 | 1,735 | 104 | 6 | % | |||||||||||
Total Revenues |
$ | 8,286 | $ | 8,220 | $ | 66 | 1 | % | ||||||||
(1) | Proprietary software and hardware are the components of the system sales line item |
|
(2) | Professional services and maintenance & support are the components of the service,
maintenance and support
line item. BPM consulting services are
included in professional services. |
16
Three Months Ended, | ||||||||||||||||
July 31, 2011 | July 31, 2010 | Change | % Change | |||||||||||||
Cost of system sales |
$ | 628 | $ | 781 | $ | (153 | ) | (20 | %) | |||||||
Cost of services, maintenance and support |
1,156 | 1,379 | (223 | ) | (16 | %) | ||||||||||
Cost of software as a service |
418 | 472 | (54 | ) | (11 | %) | ||||||||||
Total cost of sales |
$ | 2,202 | $ | 2,632 | $ | (430 | ) | (16 | %) | |||||||
Six Months Ended, | ||||||||||||||||
July 31, 2011 | July 31, 2010 | Change | % Change | |||||||||||||
Cost of system sales |
$ | 1,169 | $ | 1,518 | $ | (349 | ) | (23 | %) | |||||||
Cost of services, maintenance and support |
2,490 | 2,761 | (271 | ) | (10 | %) | ||||||||||
Cost of software as a service |
854 | 929 | (75 | ) | (8 | %) | ||||||||||
Total cost of sales |
$ | 4,513 | $ | 5,208 | $ | (695 | ) | (13 | %) | |||||||
17
Three Months Ended, | ||||||||||||||||
July 31, 2011 | July 31, 2010 | Change | % Change | |||||||||||||
Selling, general, and administrative |
$ | 1,583 | $ | 1,506 | $ | 77 | 5 | % | ||||||||
Six Months Ended, | ||||||||||||||||
July 31, 2011 | July 31, 2010 | Change | % Change | |||||||||||||
Selling, general, and administrative |
$ | 3,247 | $ | 3,203 | $ | 44 | 1 | % | ||||||||
Three Months Ended, | ||||||||||||||||
July 31, 2011 | July 31, 2010 | Change | % Change | |||||||||||||
Research and development expense |
$ | 342 | $ | 567 | $ | (225 | ) | (40 | %) | |||||||
Capitalized research and
development cost |
606 | 578 | 28 | 5 | % | |||||||||||
Total R&D Cost |
$ | 948 | $ | 1,145 | $ | (197 | ) | (17 | %) | |||||||
Six Months Ended, | ||||||||||||||||
July 31, 2011 | July 31, 2010 | Change | % Change | |||||||||||||
Research and development expense |
$ | 760 | $ | 1,037 | $ | (277 | ) | (27 | %) | |||||||
Capitalized research and
development cost |
1,391 | 1,274 | 117 | 9 | % | |||||||||||
Total R&D Cost |
$ | 2,151 | $ | 2,311 | $ | (160 | ) | (7 | %) | |||||||
18
19
Six Months Ended, | ||||||||||||||||
July 31, | July 31, | |||||||||||||||
2011 | 2010 | Change | % Change | |||||||||||||
Gross margin |
$ | 3,774,000 | $ | 3,012,000 | 762,000 | 25 | % | |||||||||
Gross margin % |
46 | % | 37 | % | 9 | % | ||||||||||
Cash flow provided by
(used in) operations |
$ | 710,000 | $ | (15,000 | ) | 725,000 | 4833 | % | ||||||||
Adjusted EBITDA |
$ | 1,549,000 | $ | 766,000 | 783,000 | 102 | % | |||||||||
Adjusted EBITDA, less
capitalized software
development costs |
$ | 158,000 | $ | (508,000 | ) | 666,000 | 131 | % | ||||||||
Adjusted EBITDA margin |
19 | % | 9 | % | 10 | % |
20
Three Months Ended, | Six Months Ended, | |||||||||||||||
July 31, | July 31, | July 31, | July 31, | |||||||||||||
Adjusted EBITDA Reconciliation | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Net loss |
$ | (7 | ) | $ | (76 | ) | $ | (288 | ) | $ | (1,252 | ) | ||||
Interest expense |
22 | 34 | 42 | 56 | ||||||||||||
Income tax expense |
5 | 5 | 7 | 10 | ||||||||||||
Depreciation and other amortization |
193 | 233 | 391 | 455 | ||||||||||||
Amortization of capitalized software development
costs |
507 | 639 | 1,001 | 1,254 | ||||||||||||
EBITDA |
720 | 835 | 1,153 | 523 | ||||||||||||
Stock-based compensation expense |
199 | 155 | 396 | 243 | ||||||||||||
Adjusted EBITDA |
$ | 919 | $ | 990 | $ | 1,549 | $ | 766 | ||||||||
Capitalized software development costs |
606 | 578 | 1,391 | 1,274 | ||||||||||||
Adjusted EBITDA, less capitalized software
development costs |
313 | 412 | 158 | (508 | ) | |||||||||||
Adjusted EBITDA Margin (1) |
22 | % | 21 | % | 19 | % | 9 | % | ||||||||
Adjusted EBITDA per diluted share |
||||||||||||||||
Earnings (loss) per share diluted |
$ | (0.00 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.13 | ) | ||||
Interest expense (2) |
0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
Tax expenses (2) |
0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
Depreciation and other amortization (2) |
0.02 | 0.02 | 0.04 | 0.05 | ||||||||||||
Amortization of capitalized software development
costs (2) |
0.05 | 0.07 | 0.10 | 0.13 | ||||||||||||
Stock-based compensation expense (2) |
0.02 | 0.02 | 0.04 | 0.03 | ||||||||||||
Adjusted EBITDA per adjusted diluted share |
$ | 0.09 | $ | 0.10 | $ | 0.15 | $ | 0.08 | ||||||||
Diluted weighted average shares |
9,817,370 | 9,506,904 | 9,847,348 | 9,460,911 | ||||||||||||
Includable incremental shares adjusted EBITDA
(3) |
12,715 | 19,336 | 17,951 | 19,336 | ||||||||||||
Adjusted diluted shares |
$ | 9,830,085 | $ | 9,526,240 | 9,865,299 | 9,480,247 | ||||||||||
(1) | Adjusted EBITDA as a percentage of GAAP revenues |
|
(2) | Per adjusted diluted shares |
|
(3) | The number of incremental shares that would be dilutive under profit assumption, only
applicable under a GAAP net loss. If GAAP profit is earned in the current period, no
additional incremental shares are assumed. If negative adjusted EBITDA is incurred, no
additional incremental shares are assumed for adjusted diluted shares. |
21
22
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Item 4. | CONTROLS AND PROCEDURES |
23
Item 1. | LEGAL PROCEEDINGS |
Item 1A. | RISK FACTORS |
24
Item 3. | DEFAULTS UPON SENIOR SECURITIES |
Item 6. | EXHIBITS |
(a) | Exhibits |
3.1(a) | Certificate of Incorporation of Streamline Health Solutions, Inc. (*) |
||
3.1(b) | Certificate of Incorporation of Streamline Health Solutions, Inc., amendment No. 1 (*) |
||
3.2 | Bylaws of Streamline Health Solutions, Inc. (*) |
||
11.1 | Computation of earnings (loss) per common share** |
||
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended** |
||
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended** |
||
32.1 | Certification of the Chief Executive Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002** |
||
32.2 | Certification of the Chief Financial Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002** |
(*) | Incorporated herein by reference from, the Registrants SEC filings.
(See INDEX TO EXHIBITS) |
|
(**) | Included herein. |
25
STREAMLINE HEALTH SOLUTIONS, INC. |
||||
DATE: September 13, 2011 | By: | /s/ Robert E. Watson | ||
Robert E. Watson | ||||
Chief Executive Officer | ||||
DATE: September 13, 2011 | By: | /s/ Stephen H. Murdock | ||
Stephen H. Murdock | ||||
Chief Financial Officer |
26
Exhibit No. | Description of Exhibit | |||||
3.1 | (a) | Certificate of Incorporation of Streamline Health
Solutions, Inc. f/k/a/ LanVision Systems, Inc.
(Previously filed with the Commission and
incorporated herein by reference from, the
Registrants (LanVision System, Inc.) Registration
Statement on Form S-1, File Number 333-01494, as
filed with the Commission on April 15, 1996.)
|
* | |||
3.1 | (b) | Certificate of Incorporation of Streamline Health
Solutions, Inc. f/k/a LanVision Systems, Inc.,
amendment No. 1. (Previously filed with the
Commission and incorporated herein by reference from
the Registrants Form 10-Q, as filed with the
Commission on September 8, 2006.)
|
* | |||
3.2 | Bylaws of Streamline Health Solutions, Inc. as
amended and restated on July 22, 2010, and previously
filed with the Commission and incorporated herein by
reference from the Registrants Form 10-Q, as filed
with the Commission on September 9, 2010.
|
* | ||||
11.1 | Statement Regarding Computation of Per Share Earnings
|
** | ||||
31.1 | Certification by Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
** | ||||
31.2 | Certification by Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
** | ||||
32.1 | Certification by Chief Executive Officer pursuant to
U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
|
** | ||||
32.2 | Certification by Chief Financial Officer pursuant to
U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
|
** |
* | Incorporated by reference herein as indicated |
|
** | Included herein |
27
Six Months Ended | ||||||||
July 31, 2011 | July 31, 2010 | |||||||
Net (loss) |
$ | (287,714 | ) | $ | (1,252,324 | ) | ||
Average shares outstanding |
9,847,348 | 9,460,911 | ||||||
Stock options & purchase plan: |
||||||||
Total options & purchase plan shares |
| | ||||||
Assumed treasury stock buyback |
| | ||||||
Convertible redeemable preferred stock
assumed converted |
| | ||||||
Number of shares used in per
common share computation |
9,847,348 | 9,460,911 | ||||||
Basic net ( loss ) per share of common stock |
$ | (0.03 | ) | $ | (0.13 | ) | ||
Diluted net ( loss ) per share of common stock |
$ | (0.03 | ) | $ | (0.13 | ) | ||
September 13, 2011 | /s/ Robert E. Watson | |||
Chief Executive Officer and | ||||
President |
September 13, 2011 | /s/ Stephen H. Murdock | |||
Chief Financial Officer | ||||
(1) | The Quarterly Report on Form
10-Q of the Company for the quarter ended July 31, 2011
(the Report) fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
(2) | The information contained in the Report fairly presents, in all material respects, the
financial condition, and results of operations of the Company. |
/s/ Robert E. Watson
|
||
President |
(1) | The Quarterly Report on Form 10-Q of the Company for the quarter ended July 31, 2011
(the Report) fully complies with the requirements of section 13(a) or 15 (d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
(2) | The information contained in the Report fairly presents, in all material respects, the
financial condition, and results of operations of the Company. |
/s/ Stephen H. Murdock
|
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
|
Jul. 31, 2011
|
Jan. 31, 2011
|
---|---|---|
Current assets: | Â | Â |
Accounts receivable, net of allowance for doubtful accounts | $ 140,000 | $ 100,000 |
Other assets: | Â | Â |
Capitalized software development costs, net of accumulated amortization | 13,833,284 | 12,832,347 |
Other, including deferred taxes | $ 711,000 | $ 711,000 |
Stockholders' equity: | Â | Â |
Convertible redeemable preferred stock, par value | $ 0.01 | $ 0.01 |
Convertible redeemable preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Convertible redeemable preferred stock, shares issued | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 10,053,979 | 9,856,517 |
Common stock, shares outstanding | 10,053,979 | 9,856,517 |
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2011
|
Jul. 31, 2010
|
Jul. 31, 2011
|
Jul. 31, 2010
|
|
Revenues: | Â | Â | Â | Â |
Systems sales | $ 163,200 | $ 960,880 | $ 294,202 | $ 1,111,318 |
Services, maintenance and support | 3,069,869 | 2,830,935 | 6,153,830 | 5,374,510 |
Software as a service | 912,864 | 884,662 | 1,837,923 | 1,734,665 |
Total revenues | 4,145,933 | 4,676,477 | 8,285,955 | 8,220,493 |
Operating expenses: | Â | Â | Â | Â |
Cost of systems sales | 627,550 | 780,506 | 1,168,502 | 1,518,395 |
Cost of services, maintenance and support | 1,155,667 | 1,378,778 | 2,489,538 | 2,760,988 |
Cost of software as a service | 417,868 | 472,098 | 854,291 | 929,126 |
Selling, general and administrative | 1,582,532 | 1,505,863 | 3,247,193 | 3,203,440 |
Product research and development | 342,157 | 567,147 | 759,931 | 1,037,318 |
Total operating expenses | 4,125,774 | 4,704,392 | 8,519,455 | 9,449,267 |
Operating income (loss) | 20,159 | (27,915) | (233,500) | (1,228,774) |
Other income (expense): | Â | Â | Â | Â |
Interest expense | (21,791) | (34,001) | (41,633) | (56,336) |
Miscellaneous income (expenses) | (311) | (9,023) | (5,266) | 42,786 |
Loss before income taxes | (1,943) | (70,939) | (280,399) | (1,242,324) |
Income tax (expense) | (5,000) | (5,000) | (7,315) | (10,000) |
Net loss | $ (6,943) | $ (75,939) | $ (287,714) | $ (1,252,324) |
Basic and diluted net earnings (loss) per common share | $ 0.00 | $ (0.01) | $ (0.03) | $ (0.13) |
Number of shares used in basic and diluted per common share computation | 9,817,370 | 9,506,904 | 9,847,348 | 9,460,911 |
Document and Entity Information (USD $)
|
6 Months Ended | ||
---|---|---|---|
Jul. 31, 2011
|
Sep. 13, 2011
|
Jul. 31, 2010
|
|
Document and Entity Information [Abstract] | Â | Â | Â |
Entity Registrant Name | STREAMLINE HEALTH SOLUTIONS INC. | Â | Â |
Entity Central Index Key | 0001008586 | Â | Â |
Document Type | 10-Q | Â | Â |
Document Period End Date | Jul. 31, 2011 | ||
Amendment Flag | false | Â | Â |
Document Fiscal Year Focus | 2011 | Â | Â |
Document Fiscal Period Focus | Q2 | Â | Â |
Current Fiscal Year End Date | --01-31 | Â | Â |
Entity Well-known Seasoned Issuer | No | Â | Â |
Entity Voluntary Filers | No | Â | Â |
Entity Current Reporting Status | Yes | Â | Â |
Entity Filer Category | Smaller Reporting Company | Â | Â |
Entity Public Float | Â | Â | $ 10,285,778 |
Entity Common Stock, Shares Outstanding | Â | 10,053,979 | Â |
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Commitments and Contingencies
|
6 Months Ended |
---|---|
Jul. 31, 2011
|
|
Commitments and Contingencies [Abstract] | Â |
COMMITMENTS AND CONTINGENCIES |
NOTE G — COMMITTMENTS AND CONTINGENCIES
Streamline Health has entered into employment agreements with its officers and certain employees
that generally provide annual salary, a minimum bonus, discretionary bonus, and stock incentive
provisions.
As a result of a reduction in force implemented by management during the quarter ended July 31,
2011, the Company expensed $100,000 in the second quarter of fiscal 2011, in accordance with
severance agreements.
|
Equity Awards
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Awards [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY AWARDS |
NOTE C — EQUITY AWARDS
During the six months ended July 31, 2011, the Company granted 858,000 options with a weighted
average exercise price of $1.94 per share. During the same period 115,916 options expired with an
average exercise price of $1.84 per share and 32,598 options were exercised under all plans.
The fair value of each option grant during the six months ended July 31, 2011 was estimated at the
date of the grants using a Black-Scholes option pricing model with the following weighted average
assumptions:
During the six months ended July 31, 2011, the Company granted 110,412 restricted stock shares
with a weighted average fair value of $1.68 per share. These shares are subject to the 2005
Incentive Compensation Plan as amended, and are granted to certain independent members of the Board
of Directors. The shares have an approximate one-year restriction period. During the same period
223,090 restricted shares had their restriction period lapse; these shares had a weighted average
fair value of $1.92 per share.
During the six months ended July 31, 2011, the Company granted 25,000 restricted stock shares as
executive inducement grants with a weighted average fair value of $1.91 per share. The restrictions
lapsed immediately upon the grant of the shares, and the Company recognized $48,000 of compensation
expense for the six months ended July 31, 2011 relating to these inducement grants. These executive
inducement grants were approved by the board pursuant to Nasdaq Marketplace Rule 5635(c)(4). The
terms of the grants are nearly as practicable identical to the terms and conditions of the
Company’s 2005 Incentive Compensation Plan.
|
Basis of Presentation
|
6 Months Ended |
---|---|
Jul. 31, 2011
|
|
Basis of Presentation [Abstract] | Â |
BASIS OF PRESENTATION |
NOTE A — BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by
Streamline Health Solutions, Inc. (“Streamline Health® or the Company”), pursuant to the
rules and regulations applicable to quarterly reports on Form 10-Q of the U. S. Securities and
Exchange Commission. Certain information and note disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to those rules and regulations, although the Company believes that
the disclosures made are adequate to make the information not misleading. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation of the Condensed Consolidated Financial Statements have been included. These
Condensed Consolidated Financial Statements should be read in conjunction with the financial
statements and notes thereto included in the most recent Streamline Health Solutions, Inc. Annual
Report on Form 10-K, Commission File Number 0-28132. Operating results for the three and six
months ended July 31, 2011 are not necessarily indicative of the results that may be expected for
the fiscal year ending January 31, 2012.
|
Earnings Per Share
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2011
|
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Earnings Per Share [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE |
NOTE D — EARNINGS PER SHARE
The two-class method is used to calculate basic and diluted earnings (loss) per share (“EPS”) as
unvested restricted stock awards are considered participating securities because they entitle
holders to non-forfeitable rights to dividends or dividend equivalents during the vesting term.
Under the two-class method, basic earnings (loss) per common share is computed by dividing the net
earnings (loss) allocated to common stock holders by the weighted average number of common shares
outstanding. In determining the amount of net earnings (loss) to allocate to common holders,
earnings are allocated to both common shares and participating securities based on their respective
weighted-average shares outstanding for the period. Diluted net earnings (loss) per common share
reflects the potential dilution that could occur if stock options, stock purchase plan commitments,
and restricted stock were exercised into common stock, under certain circumstances, that then would
share in the earnings of Streamline Health. The dilutive effect is calculated using the treasury
stock method. A reconciliation of basic and diluted weighted average shares for basic and diluted
EPS, as well as anti-dilutive securities is as follows:
|
Contractual Obligations
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Obligations [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONTRACTUAL OBLIGATIONS |
NOTE E — CONTRACTUAL OBLIGATIONS
The following table details the remaining obligations including accrued interest, by fiscal year,
as of the end of the quarter:
|
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Debt
|
6 Months Ended |
---|---|
Jul. 31, 2011
|
|
Debt [Abstract] | Â |
DEBT |
NOTE F — DEBT
On April 13, 2011, the Company’s wholly owned subsidiary, Streamline Health, Inc., entered into a
second amended and restated revolving note with Fifth Third Bank, Cincinnati, OH. The terms of the
loan remain the same as set forth in the revolving note entered into on July 31, 2008, as amended
on January 6, 2009, and October 21, 2009, except as follows: (i) the maximum principal amount that
can be borrowed was increased to $3,000,000 from the prior maximum amount of $2,750,000, subject to
the borrowing base limitation; and (ii) the maturity date of the loan has been extended to October
1, 2013 from October 1, 2011. The interest rate on the outstanding principal balance of the loan
accrues at an annual floating rate of interest equal to the Adjusted Libor Rate (as defined in the
revolving note) plus 3.25%, payable monthly. The interest rate on the note was 3.5% at July 31,
2011. In accordance with the revised maturity date, the outstanding balance on the note is
classified as a long-term obligation at July 31, 2011.
In connection with entering into the second amended and restated revolving note in April 2011, the
Company also entered into an amendment to the amended and restated continuing guaranty agreement.
The terms of the continuing guarantee agreement remain the same as set forth in the guaranty
agreement entered into on July 31, 2008, as amended on January 6, 2009 and on
October 21, 2009, except that: (i) the minimum fixed charge coverage ratio covenant has been
revised, whereas the Company shall maintain a minimum trailing twelve months fixed charge coverage
ratio of 1.25, measured each fiscal quarter; (ii) the funded indebtedness to EBITDA covenant has
been revised, whereas the Company shall report a funded indebtedness to EBITDA ratio no greater
than 2.0, measured each fiscal quarter and; (iii) a covenant has been added whereas the Company’s
EBITDA shall cover its capitalized software development costs each fiscal quarter. The covenant
becomes effective on October 31, 2011 and is calculated based on the trailing nine months. As of
January 31, 2012 and thereafter, the calculation will be based on the trailing twelve months.
The note also continues to be secured by a first lien on all of the assets of the Company pursuant
to security agreements entered into by the Company.
The Company was in compliance with all of the covenants at July 31, 2011. The Company pays a
commitment fee on the unused portion of the facility of .06%. The Company had outstanding
borrowings of $1,250,000 and $1,200,000 under this revolving loan as of July 31, 2011 and January
31, 2011, respectively.
|
Summary of Significant Accounting Policies
|
6 Months Ended |
---|---|
Jul. 31, 2011
|
|
Summary of Significant Accounting Policies [Abstract] | Â |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Company’s significant accounting policies is presented in “Note B — Significant
Accounting Policies” in the fiscal year 2010 Annual Report on Form 10-K. Users of financial
information for interim periods are encouraged to refer to the footnotes contained in the Annual
Report when reviewing interim financial results.
Recently Adopted Accounting Pronouncements
ASU 2009-13. In October 2009, the Financial Accounting Standards Board (FASB) issued Accounting
Standard Update (ASU) 2009-13 —Multiple-Deliverable Revenue Arrangements (ASU 2009-13). ASU
2009-13 requires a vendor to allocate revenue to each unit of accounting in many arrangements
involving multiple deliverables based on the relative selling price of each deliverable. It also
changes the level of evidence of stand-alone selling price required to separate deliverables by
allowing a vendor to make its best estimate of the stand-alone selling price of deliverables when
more objective evidence of selling price is not available.
The Company adopted ASU 2009-13 for all new and materially modified arrangements on a prospective
basis beginning February 1, 2011. Upon review of the primary accounting literature, if
the Company is unable to establish selling price using VSOE (vendor specific objective evidence) or
third-party evidence, the Company will establish an estimated selling price. The estimated selling
price is the price at which the Company would transact a sale if the product or service were sold
on a stand-alone basis. The Company establishes a best estimate of selling price by considering
internal factors relevant to pricing practices such as costs and margin objectives, stand-alone
sales prices of similar services and percentage of the fee charged for a primary service relative
to a particular piece of licensed software. Additional consideration is
also given to market conditions such as competitor pricing strategies and market trends. The
Company regularly reviews VSOE for professional services in addition to estimated selling
price.
The Company has not experienced a change in units of accounting nor was there a change in
allocation of fair value to the various units of accounting. Historically, the Company has been
able to obtain VSOE or third-party evidence for significant service deliverables. No material
changes in assumptions, inputs or methodology used in determining VSOE or third-party evidence have
been made. The pattern of revenue recognition is expected to remain consistent with prior periods
and the Company does not expect a material change in the timing of revenue recognition from
previous generally accepted accounting principles as applied in the prior period.
Revenue Recognition — Multiple-Deliverable Revenue Arrangements
The Company may bundle certain proprietary software technology licenses with post-contract customer
support (“PCS”), and implementation services. The Company may also bundle software as a service
(“SaaS”) offerings with implementation services. In addition, the Company may also bundle
additional consulting services such as Business Process Management (“BPM”) and Revenue Cycle
Management (“RCM”) services with proprietary software license agreements and SaaS subscriptions.
Provided that the undelivered elements in arrangements that include multiple elements are fixed and
determinable, the Company allocates the total revenue to be earned under the arrangement to the
elements based on their relative fair value of vendor specific objective evidence (“VSOE”),
third-party evidence or estimated selling price, relative to the hierarchy. The amounts
representing the fair value of the undelivered items are deferred until delivered, or recognized
pro rata over the service contract.
|
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